Firms delivering state-backed loans under the coronavirus emergency measures need to balance the quick delivery of funds with managing the risks of financial crime, the City watchdog has warned.
The Financial Conduct Authority (FCA) said that in the current environment, where an authorised firm has carried out appropriate due diligence for existing customers, it does not need to make further checks for their eligibility for government schemes.
However, the regulator said that financial crime risks may be significantly higher for new customers and authorised firms should carry out their normal due diligence processes in accordance with the money laundering regulations.
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“Ensuring that firms manage the risks of fraud and money laundering is essential to a well-functioning financial services system,” the FCA said on its website.
“We recognise that, currently, the need to manage these risks should be balanced against the need for the fast and efficient release of funds to businesses under the government’s schemes.”
Charles Delingpole, chief executive of compliance and AML screening firm ComplyAdvantage, said there has been a rise in financial crime during the pandemic, such as general phishing attacks and digital crime.
“Financial crime, like all crime, is adaptive and the coronavirus is already proving to be an effective environment for criminal activity,” he said.
“Funds have been set up across the world to help ameliorate the situation, but they’ve already been targeted by criminals to great effect.
“Robust digital measures need to be put in place to prevent customers from falling foul of criminal activity.
“Warnings around phishing attempts should be commonplace in this environment. Especially as purchases are moving online while customers comply with lockdown and shelter-in-place orders.”
Delingpole said that fintechs have no excuse to be exploited by financial crime as they should already have taken the appropriate actions to guard against it by screening customers and monitoring transactions with the most efficient technology available.
“More transactions are being conducted online and given the overwhelming digital aspect of fintechs this should be their time to shine as a secure and efficient method of handling money,” he said.